Putting Together Your Down Payment
Lots of people who would like to purchase a new house can qualify for various loan programs, but they don't have a lot of cash to put up the standard down payment. Below are a few ways to get together a down payment
Reduce expenses and save. Be on the look-out for ways to trim your monthly expenses to put away money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically deposited into savings each pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your vacation.
Sell items you don't really need and find a part-time job. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the things you may be able to put up for sale. A closetful of small things can add up to a fair amount at a garage or tag sale. You might also look into what any investments you hold could sell for.
Tap into your retirement funds. Investigate the parameters of your specific program. Some homebuyers get down payment money by withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure to find out about the tax consequences, repayment terms, and penalties for withdrawing early.
Ask for help from family members. First-time buyers somtimes get down payment help from giving parents and other family members who are able to help get them in their own home. Your family members may be inclined to help you reach the goal of having your own home.
Research housing finance agencies. These agencies provide provisional mortgage loans to moderate and low income homebuyers, buyers interested in renovating a home in a particular part of the city, and other groups as defined by each agency. With the help of this kind of agency, you may get a below market interest rate, down payment assistance and other incentives. Housing finance agencies can assist eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit agencies were established to promote community in specific neighborhoods.
Learn about low-down and no-down mortgage loan programs.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time buyers and others who may not be eligible for a traditional mortgage loan by themselves, by offering mortgage insurance to the lenders.
Interest rates with an FHA mortgage normally feature the current interest rate, but the down payment with an FHA loan will be lower than those of conventional loans. Closing costs can be covered by the mortgage, and your down payment might be as low as 3% of the total.
- VA mortgage loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a competitive interest rate, no down payment, and limited closing costs. Although the VA does not actually issue the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of needing to put together the typical 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the you borrow a portion of the seller's home equity.. You would finance the majority of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Typically you'll pay a slightly higher rate with the loan financed by the seller.
The feeling of accomplishment will be the same, no matter which method you use to come up with your down payment. Your new home will be well worth it!
Want to discuss the best options for down payments? Call us: 9727982110.